Risk

The Latest

Defensive equity investment strategies are nothing new, but a key issue with many is that defensive does not necessarily mean low volatility. Scientific Beta looks at a strategy to target both goals, using robust low volatility controls to create a new defensive index for the volatility-averse investor.

Ensuring a portfolio has enough liquidity to rebalance back to the long-term strategic asset allocation is the most critical preparation investors can do ahead of any crisis, according to Mark Wiseman, who said this current environment could be the "opportunity of a generation".

The lackadaisical response by the United States to the coronavirus crisis is indicative of broader risk management issues and comparable to the country’s anaemic response to climate change according to risk expert, Bob Litterman.

Chief investment officer of the world’s largest pension fund the $1.5 trillion GPIF, Hiro Mizuno, says large institutional investors must stay calm and maintain their long term investment course. He told Top1000funds.com that “long term investment is needed more than ever before”.

The US Federal Reserve’s decision to make its treasury bond-buying program open-ended will not be enough to ease the extreme liquidity crisis despite Wall Street rallying on the news, according to Campbell Harvey, finance professor at Duke University.

Investors have pulled $83 billion from emerging markets since the beginning of the COVID-19 crisis, the largest capital outflow ever recorded, and the IMF and the World Bank are calling on G20 countries to show relief in dealing with their emerging market counterparts.

Even for long term investors who pride themselves on the big picture and horizons stretching far into the future, the unprecedented change of recent weeks is hair-raising. Enough liquidity on hand to take advantage of buying opportunities once they arise and comfortably pay benefits is crucial. We look at the strategies of investors around the world in response to the market conditions.

Last Thursday, March 12 the US Senate Democrats’ Special Committee on the Climate Crisis heard from industry experts, including Bob Litterman and Frederic Samama, on the economic risks of climate change. They all pushed for a price on carbon and for action, now.

Sign up to our weekly newsletter for regular news flashes and industry insights.

About

top1000funds.com is the news and analysis site for the world’s largest institutional investors.

Focusing on investment strategy and implementation, it is populated by original news stories, case studies and research that relate directly to the work of investment professionals at pension funds, endowments and sovereign wealth funds.